Is It Startup Or Start-up & Why Startup Fail

What Is Startup/ Start-up?

A startup or start-up is an entrepreneurial venture characteristically a newly emerged business planned to quickly develop a scalable business model by offering an innovative product or service to meet a marketplace need.

According to Paul GrahamA startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.

Startup Or Start-up

The debate about the spelling of startup or start-up, which one is correct, rumbles on, but the fact is it does not make much difference. Both are acceptable as long as you choose a variant and use it consistently. Some people believe that it’s a matter of style, not grammar. 

Let’s check out how the professionals take it:

Causes Of Failure Of Startup

You come up with a great business idea, and the people who are close to you think that you have created a big thing, and some of them even back you. You do research, build a team, pitch your idea to the investment community and get some funding. In the beginning, you launch with enthusiasm, but later it does not go well, and you fail to make it a real success.  

All startup founders think that they have created the next big solution in the industry. It’s easy to get caught up in the success stories of startups, failure is more common, and 9 out of 10 startups fail. Every startup has unique causes of failure, but most of them are similar to each other.

Less Market Demand

There may be following few reasons related to startup product;

Problem Solving In Business: Startup feels that their product is good. It is best to solve a particular problem in the relevant industry, but in reality, it does not solve the market problem.

When Product Has Low Demand: when a startup feels that their product is appealing and there will be a massive demand for the product or service, the demand is low, and you made a wrong calculation related to product demand. 

Not The Right Time To Offer A Product: Your product needs a compelling value proposition as well as the right market timing. You might have a top-quality product but it might be a few years ahead of its time, which might lead to its untimely demise. Know the need of your target market before you choose to jump in.

Insufficient Funds

Money is perhaps one of the most dominant resources of business to run it smoothly. But more than one-third of business fails when they run out of cash before achieving their set objectives. Most startups come up short as they cannot raise additional financing needed to maintain the business efficiently.

In some cases, poor financial management leads to inefficiency in running the business. The startup is unable to follow the budgetary techniques to monitor expenses and cash flows. However, most importantly, if a startup is inept in making sales and generating revenues, it’s challenging to endure for a more extended period. Many startups attempt to pivot in this situation, but chances of success run out when their cash runs out.

Disharmony In Management

A startup founder may be a hard worker, but he cannot do everything alone required for a business to run successfully. An experienced team with different skill sets needed to handle product development, operations, finances, and marketing. Poor top management can neither strategize well nor execute efficiently and there are higher chances that the startup will fail sooner or later. 

Another reason is the disharmony in the team which can result in fail. Conflicts in founders can create obstacles and it’s impossible to run the startups smoothly as possible. 

Pricing Strategy

Finding the right price for the product is difficult for startups because the product or service may not have any comparable offering in the marketplace. So the pricing should be appropriate for the success of the startup. If a product has a high price, it may fail to attract customers and can go pear-shaped. 

Pricing is a delicate balancing act, some startups cannot evaluate the operating cost and fail to adjust the pricing to generate profit from it. They keep the price low to attract customers, resulting in low gains and seriously disturbs the cash flows.

Sometimes competitors might be huge and they can kill startups in terms of pricing. For a new startup, it is challenging to survive based on a price war with a gigantic competitor.

Not Matching Customer’s Needs

Most of the startup fails because their product or service does not fulfill customer’s needs. Such startups don’t take customer’s feedback seriously during product development, testing and ignore customer’s needs. Nobody or nothing can save an inferior product from fizzling. So startups that pay less attention to developing user-friendly products or if it does not solve customer pain-points may fail to attract customers. 

The startups who fail to understand how to target customers are going to benefit from the product, their users will not come back.

Absence Of A Proper Business Model

Many startups believe that it is easy to build a product, services and acquire customers. But it is not possible to achieve success without any business model. A proper business model is necessary to figure out a scalable way to reach customers. The startups with great products attract customers initially. Still, without a viable business model, they fail to develop a strategy regarding after-sales services, operations, distribution, marketing, and retaining the existing customers. 

Poor Marketing

For every startup, it is essential to promote the product to the right audience. The right marketing strategy can win the attention of potential customers and convert them into leads. If the startup fails to promote the product successfully, then the business might not grow and come to an end even having a good product.  

The inability to market the product is a common cause of failure among founders who build a good product but didn’t relish the role of marketing it. So the one who does not have marketing skills or does not understand the importance of promoting the product may not attract customers, which ultimately fails.

Sometimes the startup doesn’t have many financial resources or cannot attract investors; in these cases, the startup compromises on the marketing side and cannot promote the product as needed. 

Startups also fail due to various reasons outside of this list, but this should not deter you from starting up. But if you do not want to perish like 90% of startups, you better avoid these common pitfalls. You will need lots of perseverance to succeed as a startup. You need to constantly plan, execute, track the results and learn from your mistakes. Plan well, don’t be short-sighted, and be flexible to ever-changing market dynamics.